Gambling News | 19 Jan 2021

Entain encountering opposition to the proposed acquisition of Enlabs AB

According to reports, Entain, a well-known iGaming and sportsbook operator, is encountering shareholder opposition to its projected £250 million ($340.3 million) proposal to acquire rival Enlabs AB, which operates in the Baltic region.

SBCNews reported on Monday that the Isle of Man-based company is already in charge of many iGaming brands, including Bwin, Ladbrokes, PartyPoker, and SportingBet, and that it has partnered with MGM Resorts International to manage the BetMGM platform in the US. According to the source, the operator had previously proposed a purchase in which shareholders of Enlabs AB would get about £3.50 ($4.76) for each individual share they own in the Stockholm-listed company.

Baltic juggernaut

According to reports, Entain said that if the acquisition were successful, it would expand its market share in the online gaming markets of Lithuania, Estonia, and Latvia and generate an extra £80,2 million ($109.2 million) in net gaming revenues per year. The London-listed buyer, which was formerly known as GVC Holdings until changing its name in December, reportedly claimed that the acquisition would increase its annual earnings before interest, tax, depreciation, and amortisation by up to £20.9 million ($28.5 million) and give it control over the Optibet-branded family of iGaming domains in addition to a majority stake in Maltese operator Shogun Group.

Analytical conflict

Alta Fox Capital Management, a Texas-based hedge fund, has reportedly said that it will not sell any of its own 3.3% shareholding in Enlabs AB to Entain at the suggested price because it thinks that Entain's offer "materially undervalues the company" and represents "a negligible premium of 1.1% to the pre-offer trading price." The investor, who is allegedly controlled by US investor Connor Haley, reportedly stated that it is worried about the conditions of the proposed purchase, including the "strange circumstances that make us wonder why Enlabs AB' Chairman, Niklas Braathen, accepted such an inferior offer."

Contrary assertion

More than 10% of the current Enlabs AB investors reportedly supported Alta Fox Capital Management's decision to reject Entain's recommended offer, according to reports. Alta Fox Capital Management reportedly stated that it believes the total acquisition should be valued at about £337 million ($458.7 million), with each share closer to £4.83 ($6.58).